PRESIDENT Barack Obama yesterday proposed slashing Washington’s budget deficit by $4 trillion (£2.46 trillion) with a mix of spending cuts and tax rises, after dismissing Republican demands for deeper cuts as too radical.
In his first speech since announcing that he would run for re-election next year, Obama outlined a 12-year time-frame for the deficit reduction, which he said would include $3 in spending cuts and interest savings for every $1 from tax increases. He said this would enable the government to collect enough taxes to cover all government spending, apart from interest on the debt.
In a bid to boost investor confidence in the US’s deficit cutting plan, Obama also pledged a “debt fail-safe” trigger to force spending cuts if debt levels do not decline as planned.
“We have to live within our means, reduce our deficit, and get back on a path that will allow us to pay down our debt,” he said.
Republicans argued that it did not go far enough to reduce the $14 trillion US debt, and reiterated their opposition to any tax increases.